ANA Warns FCC about its Latest Set-Top Box Proposal

In previous postings, we’ve been keeping you current on the FCC’s activities to create needed competition in the set-top box (STB) marketplace. The FCC has yet to make public its new proposal, though the bipartisan leadership of the House Judiciary and Energy and Commerce Committees have urged it to do so. With the FCC poised to take final action in the next two weeks on set-top boxes, ANA met with several FCC commissioners to reiterate advertising’s critical role in helping to provide financial support for programming, and to discuss the proposal’s impacts on advertising and the availability of information to consumers. We explained the detailed and carefully-crafted agreements between pay-TV providers and advertisers that contain important elements such as terms of compensation, ad placement, and viewership representations necessary to the success of the advertising marketplace.  

The FCC’s latest proposal relies on apps to be developed by pay-TV providers and then licensed to third parties for use on their own platforms and networks. At this point, though we’re not sure just how, the FCC sees itself as the arbiter of such agreements and intends to take enforcement action against discriminatory or unreasonable behavior in apps’ implementation. ANA emphasized that any revised FCC proposal – utilizing apps or other means to create competition in the set-top box market – must ensure that advertising is transmitted whole and intact, so that contractual terms can be honored and enforced; otherwise, the financial underpinnings provided by advertising will jeopardize both existing and new programming.

ANA further stated that any licensing provision must make sure that the third party “steps into the shoes” of the original pay-TV provider regarding contractual obligations, agreements and terms. We discussed with the Commissioners the need to assess carefully the relationship of any requirements regarding search functionality, and warned against the proposal’s potential for encroachments on customer privacy and opening avenues for piracy of copyrighted and protected material. Finally, ANA expressed our view that the Commission should not become the enforcer of programming agreements or compliance, as current law designates the Copyright Office to oversee the protection of creative interests and the Department of Justice and Federal Trade Commission are vested with jurisdiction to challenge anti-competitive behavior. There simply is no need for duplicative and potentially inconsistent regulation, as current law affords sufficient protections under which the parties are the best enforcers of their own agreements.

Many other interests are expressing their concerns about this proposal, particularly the intrusive and draconian licensing regimen the FCC appears to be considering. As of now, several of the Commissioners have indicated they believe the licensing aspect must be refined, so it is uncertain just what action the FCC will take when this proposal is scheduled to come up at the Commission meeting on September 29th.